By John G. Shearer
Pepperdine University’s Graziadio School of Business and Management
In recent months, a technology startup hub around West Los Angeles with Santa Monica at the heart has gained much steam including national media coverage. Dubbed “Silicon Beach,” the roughly three-mile stretch of sand from Venice to Santa Monica, is now home to more than 500 start-ups. Ambitious, mostly young businesspeople have set up shop to serve a wide range of industries including internet broadcast services, traditional entertainment, mobile applications and celebrity-aligned companies.
Entrepreneurship is, at its core, a creative activity. And that is exactly what draws people to start a business near the übercool Venice Beach boardwalk and the inspiring beach-oriented work environment in Santa Monica. The area offers a vibrant social scene, great weather and an ocean view.
It’s not surprising that Silicon Beach is enjoying so much success. According to a report by PricewaterhouseCoopers and the National Venture Capital Association, businesses in LA and Orange County earned more than $1.1 billion in venture capital investments in the first two quarters of 2012. While this is less than the venture capital investment in Silicon Valley, it is more than the VC investments in Colorado and Texas combined. Investors have their sights set on the southern part of the state; Silicon Beach is proving to be an area that will breed start up businesses with an accelerated return on investment.
Not only are investors important to the success of Silicon Beach, but entrepreneurial talent is the most highly desired asset for those businesses that aim to achieve high performance over the longer term. Further, shaping the future of the tech hotbed will require collaboration among city leaders, policy makers, and local educational institutions among others. With that in mind, here are three areas that will further accelerate growth in Silicon Beach:
1) Market Southern California to would-be entrepreneurs. According to the 2011 Kauffman Index of Entrepreneurial Activity, Los Angeles had the highest rate of entrepreneurial activity in 2011 of the fifteen largest metropolitan areas in the U.S. (580 per 100,000 adults). In order to maintain that momentum and ensure that entrepreneurs are not wooed to other cities or out of state, local Chambers of Commerce and other business organizations need to develop a unified, agreed upon plan to promote Silicon Beach. (Should business leaders desire to explore such a plan, Pepperdine University will volunteer space and faculty to help develop the plan).
2) Take the Mayor’s lead in supporting Silicon Beach. Santa Monica Mayor Richard Bloom made it known in his 2012 State of City address that he is enthusiastic about promoting the growing tech community in Santa Monica. In his speech he said “Today we are not just Santa Monica, but Silicon Beach and the Tech Coast.” Support is needed from elected officials across the region. One example is Los City Councilmember Eric Garcetti who recently voiced support for digital and technology initiatives when he gave the keynote address at the Silicon Beach Fest, an event that attracted over 2,000 people, including local leaders, entrepreneurs and investors, to discuss how to sustain the flourishing tech scene in the beach communities.
3) MBA programs need to step up to support an environment that fosters entrepreneurship. A study released in May 2012 by the Graduate Management Admission Council—based on 5,366 recent or soon-to-be graduates of business schools—found that only 5% of students plan to own or start their own business after graduation. This number is too low and Pepperdine University’s Graziadio School is determined to change the trend. We aim to recruit prospective MBAs into an entrepreneurship program that encourages start-ups through a business plan competition, an MBA consulting program that matches students with real world start ups, and a Saturday MBA program that enables professionals to take classes in off-peek Saturday morning hours.
The stars are aligned for Silicon Beach to become a major technology and start-up hub. It is without question that a growing number of start ups will attract more entrepreneurs and investment to the area. Silicon Beach has the potential to be a little brother to our neighbor in Northern California – the key is to continue to attract smart, savvy entrepreneurs and encourage those that fail to continue their quest in Santa Monica.
John G. Shearer is an award-winning technologist, serial entrepreneurs and member of the entrepreneurship faculty at Pepperdine University’s Graziadio School of Business and Management.